Why does a 'Pre-Trade Control' pop-up appear when I try to place an order?
Pre-trade risk control refers to the set of checks and validations applied before an order is accepted into the exchange trading system. Its objective is to prevent erroneous, excessive, or risky orders from entering the market and causing financial or systemic risk.
In the Equity Derivatives segment (as per the recent notice issued by BSE Ltd.), one such mechanism is Limit Price Protection (LPP). Under LPP:
- Orders are validated against a reference price.
- A maximum permissible price range (e.g., a percentage of the reference price subject to a minimum absolute value) is applied.
- If the order price falls outside this range, it is rejected before execution.
This helps in:
- Preventing fat-finger errors
- Controlling abnormal price spikes
- Protecting investors from placing orders at unrealistic prices
- Maintaining orderly market conditions
In simple terms, pre-trade risk control acts as a safety filter that checks orders before they reach the market.
When placing F&O orders on our trading platforms, a pop-up is generated when the entered limit order price differs more than a certain percentage from the Last Traded Price (LTP).
- It is applicable to limit and stop-loss-limit orders for F&O orders
- The pop-up is generated based on the order type (buy/sell), and your order is placed only if the pop-up is accepted.
- The BUY order price is greater than or equal to a defined % or amount of the LTP.
- The SELL order price is less than or equal to a defined % or amount of the LTP.
The percentage variation that triggers a pop-up differs segment-wise:
| Equity F&O | Variation of Limit Price from LTP |
|---|---|
| Index Futures | 3% |
| Stock Futures | 5% |
Equity Derivative Options (LTP less than or equal to Rs.50) | Rs. 20 |
Equity Derivative Options (LTP above Rs.50) | 40% |
| SENSEX Options (existing framework applicable on all the trading days except on the day of expiry) | 40% |
| SENSEX Options (revised framework applicable only on the day of expiry) | 40% |
| Commodity F&O | Variation of Limit Price from LTP |
|---|---|
| Commodity Futures | 1% |
Commodity Derivative Options (LTP less than or equal to Rs.50) | Rs. 20 |
Commodity Derivative Options (LTP above Rs.50) | 40% |
| Currency F&O | Variation of Limit Price from LTP |
|---|---|
| Currency Futures | 1% |
Currency Derivative Options (LTP less than or equal to Rs.50) | Rs. 20 |
Currency Derivative Options (LTP above Rs.50) | 40% |
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